2015 ANNUAL REPORT & www.wemabank.com ACCOUNTS WITH YOU. ALL THE way. Corporate Information Wema Bank Plc RC 575 Head Office: Wema Tower, 54, Marina, P.M.B. 12862, Lagos, Nigeria T. +234 1 277 8600 E. [email protected] W. www.wemabank.com Purple Connect (Contact Centre) +234 0 7000 PURPLE, +234 0 80 3900 3700 (CALLS ONLY), +234 0 70 5111 2111 (SMS & WHATSAPP ONLY) [email protected] (EMAIL), www.wemabank.com (LIVE CHAT) Foreign Correspondent Banks London, UK - Standard Chartered Bank, Union Bank Plc, Bank of Beirut, United National Bank, Access Bank Plc New York, USA - Standard Chartered Bank, United Bank for Africa (UBA) Frankfurt, Germany - BHF Bank, Commerzbank, Deutsche Bank AG Auditors Akintola Williams Delloite (Chartered Accountant) CONTENTS 01 OVERVIEW 05 ABOUT WEMA BANK 06 CORPORATE PHILOSOPHY 07 FINANCIAL HIGHLIGHTS 08 02 statements 09 CORPORATE GOVERNANCE 10 ADHERENCE TO NIGERIAN SUSTAINABLE BANKING PRINCIPLES 20 WEMA BANK COMPLIANCE FRAMEWORK 25 COMPLIANCE TRAINING 27 CUSTOMER COMPLAINTS MANAGEMENT & FEEDBACK 29 03 reports 33 NOTICE OF THE ANNUAL GENERAL MEETING 34 CHAIRMAN’S STATEMENT 37 DIRECTORS’ REPORT 41 BOARD OF DIRECTORS 48 MANAGEMENT TEAM 54 STATEMENT OF DIRECTORS’ RESPONSIBILITY IN 57 RELATION TO THE FINANCIAL STATEMENT REPORT OF THE AUDIT COMMITTEE 58 INDEPENDENCE AUDITOR’S REPORT 59 REPORT OF THE EXTERNAL CONSULTANTS ON 61 APPRAISAL OF THE BOARD OF DIRECTORS CONTENTS contd. 04 financials 63 STATEMENT OF PROFIT/LOSS & OTHER COMPREHENSIVE INCOME 64 STATEMENT OF FINANCIAL POSITIONS AS AT 31ST DECEMBER 2015 65 STATEMENT OF CHANGE IN EQUITY 66 STATEMENT OF PRUDENTIAL ADJUSTMENT 67 STATEMENT OF CASH FLOW 68 NOTES TO THE ACCOUNTS 69 STATEMENTS OF VALUE ADDED 147 FINANCIAL SUMMARY 148 05 kits 149 SHAREHOLDER’S PROXY FORM SHAREHOLDERS’ DATA UPDATE FORM E-SHARE NOTIFIER SUBSCRIPTION FORM BRANCH NETWORK 01 OVERVIEW 2015 annual report 05 ABOUT WEMA BANK stablished in 1945, Wema Bank is Nigeria's longest surviving indigenous bank. Wema Bank off ers a r ange of r etail and SME banking, c orporate banking, tr easury, trade Eservices and financial advisory to its numerous customers. In 2009, the Bank underwent a strategic repositioning exercise which culminated in the Bank's decision to operate as a commercial Bank with regional authorisation in South-South Nigeria, South-West Nigeria, Lagos and Abuja in 2011. Operating a network of over 135 branches and cash centres backed by a robust ICT platform across Nigeria, we are committed t o long-t erm sus tainability in our busines s whils t maintaining the highes t s tandards of social responsibility, corporate governance and diversity in our operations. Shareholding Structure Ÿ Authorized capital of N20billion divided into 40 billion ordinary shares of 50 kobo each Ÿ Fully paid up share capital is N19,287,233,041 divided into 38,574,466,082 ordinary shares of 50 kobo each Ÿ 100% owned by Nigerians Financial, Operational & Reporting Highlights Balance Sheet & Income Statement Total Assets Total Deposits Gross Loans Gross Earnings Profit Before Tax grew by 4% to grew by 10 % to & Advances were up by 9.5 % to was maintained at N397 billion N285 billion increased by 25 % to N46 billion N3.05 billion N186 billion Dec 2014: ?382 bn Dec 2014: ?259 bn Dec 2014: ?149 bn Dec 2014: ?42 bn Dec 2014: ?3.09 bn Key Ratio Capital Loan to Non-Performing Net Interest Earnings Return on Adequacy Ratio Deposit Ratio Loans Ratio Margin Per Share Equity 15.09% 65.13% 2.67% 5.9% 6 Kobo 5.2% Dec 2014: 18.22% Dec 2014: 57.65% Dec 2014: 2.49% Dec 2014: 5.48% Dec 2014: 6 kobo Dec 2014: 5.42% 06 2015 annual report ABOUT WEMA BANK OUR corporate philosophy Our Vision To be the financial ins titution of choic e in service delivery and superior returns Our Mission To giv e e very cus tomer a delightful and memorable service experience Our Core Values Ÿ Mutual respect Ÿ Teamwork Ÿ Innovation Ÿ Performance -driven Ÿ Professionalism OUR BRAND The W ema Bank Br and r einforces our k ey diff erentiating factor which is V alue Driv en Relationship Banking. This is the single concept which drives the understanding of the new direction of the W ema Bank Br and. It is the one w ord that best personifies the beha vior, products and services of the Bank. It is the summationof the Bank's brand strength. Our Brand is driv en by a desir e to develop an intimat e relationship with our cus tomers, putting us in a position t o r ecognize their r equirements and priorities. Our appr oach is hinged on mutual respect, service, innovation and efficiency. In line with our core ideals and values, we seek to understand our customers' businesses and objectives, such that we are able to anticipate and meet their needs. Ÿ We are conscientious believers: believers in people and societal values. Ÿ We believe in collective progress, the common good and sustainable success. Ÿ We measure our success not only by what we gain or reap from the people we interact with, but most importantly, by the reciprocal value we add to them - their lives, their businesses. Ÿ We strive to create value that endure, value that uplift human dignity and collective welfare. Success t o us implies suc ceeding along with all our s takeholders, all mo ving f orward and cr eating value as a hallmark of great relationships. Operational and Reporting highlights Ÿ April 2015: 70th Anniversary Commemorative Lecture Ÿ May 2015: Concluded the Brand Refresh Programme Ÿ September 2015: Awarded Payment Card Industry Data Security Standard (PCIDSS) Ÿ November 2015: Upgrade of our Banking License to National Authorization Ÿ November 2015: Award of the ISO 27001 and ISO 20000 certifications by the British Standards Institute Ÿ November 2015: First Financial Institution in Nigeria to implement Card Control Ÿ Number of Employees 1.080 December 2015 (1,127 Dec. 2014) 2015 annual report 07 performance highlights TOTAL ASSETS GROSS LOANS 2014: N382 billion 2014: N149 billion % % 4 2015: N397 billion 25 2015: N186 billion DEPOSITS GROSS EARNINGS DEC 2014: N259 billion DEC 2014: N42 billion % % 10 DEC 2015: N285 billion 9.5 DEC 2015: N45.9 billion NET INTEREST INCOME PROFIT BEFORE TAX DEC 2014: N18.5 billion DEC 2014: N3.09 billion % 1.6% 4.5 DEC 2015: N17.7 billion DEC 2015: N3.05 billion PROFIT AFTER TAX (N) LOAN TO DEPOSIT RATIO DEC 2015 DEC 2014 DEC 2015 DEC 2014 2.33bn 2.37bn 65.13% 57.65% NON-PERFORMING LOANS (NPL) COST TO INCOME RATIO DEC 2015 DEC 2014 DEC 2015 DEC 2014 2.67% 2.49% 88.5% 87.72% NET INTEREST MARGIN CAPITAL ADEQUACY DEC 2015 DEC 2014 DEC 2015 DEC 2014 5.9% 5.48% 15.09% 18.22% 08 2 0 1 5 a n n u a l r e p o r t 02 STATEMENTS 2015 annual report 09 Corporate Governance INTRODUCTION Wema Bank Plc remains committed to the highest standards of Corporate Governance and strives to foster an environment which facilitates the implementation of good Corporate Governance principles and practices. In formulating our governance framework, we have taken into account the extant codes of Corporate Governance and the International Corporate Governance best practices. In the year under review, the Bank complied with the provisions of SEC and CBN Codes of Corporate Governance. The Board of Directors ensures that the Bank adheres to the standards of Corporate Governance and believes that such standards are critical to facilitate efficient and effective management in order to deliver long term value for the stakeholders. Being an institution which places great emphasis on the provision of excellent services to all its customers, the practice of effective and transparent corporate governance ensures that the Bank is managed in a responsible and value driven manner, aimed towards sustaining the confidence of shareholders, employees and stakeholders. GOVERNANCE STRUCTURE The Board The Board is made up of a Non-Executive Chairman, Seven (7) Non–Executive Directors and five (5) Executive Directors including the Managing Director/Chief Executive Officer (MD/CEO). Two of the Non-Executive Directors are Independent Directors, appointed in compliance with the Central Bank of Nigeria (CBN) circular on appointment of Independent Directors by banks. There were few changes to the Board composition in the year under review as an Executive Director-Mr. Nurudeen Fagbenro retired from Board with effect from June 2015 after 27 years of meritorious service to the Bank and Mr Babatunde Kasali, a Non-Executive Director, exited the Board with effect from 12th November 2015. Responsibility The roles of the Chairman and the Chief Executive are separate. The Chairman is solely responsible for the running of the Board whilst the Chief Executive with the assistance of the Executive Management team is responsible for the day to day management of the Bank's business, ensuring the implementation of the Board's decisions. The Executive Management team is composed of seasoned and experienced individuals, who execute powers delegated to them without undue interference and in accordance with agreed guidelines. Roles of the Board The primary purpose of the Board is to provide strategic direction for the Bank in order to deliver long term value to shareholders. Other functions of the Board include: Ÿ To review and provide guidance for the bank's corporate and business strategy; Ÿ To review management succession plan and determine their compensation; 10 2 0 1 5 a n n u a l r e p o r t C O R P O R A T E G O V E R N A N C E Ÿ To ensure that the Bank’s operations are ethical and comply with applicable laws and regulations; Ÿ To approve capital projects and investments; Ÿ To consider and approve the annual budget of the Bank, monitor its performance and ensure that the Bank remains a going concern; Ÿ To ensure that adequate system of internal control, financial reporting and compliance are in place; Ÿ To ensure that an effective risk management process exists and is sustained; Ÿ To constitute Board Committees and determine their terms of reference and procedures; including reviewing and approving the reports of these Committees.